Bitcoin price prediction after CPI rise: Is BTC headed for deeper losses?

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Bitcoin price prediction after CPI rise

Inflation is back above 4%

Fresh U.S. inflation data became the main event for the crypto market. In May, the Consumer Price Index, or CPI, rose to 4.2% year-on-year, up from 3.8% in April. This was the highest level since 2023, Reuters reported.

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CPI, or the Consumer Price Index, shows how prices change for consumer goods and services such as gasoline, food, housing, transportation, medical services and other everyday expenses. For the market, it is one of the key inflation indicators because the Fed looks at this data when deciding whether to cut rates, keep them unchanged or maintain a tighter policy stance for longer.

In May, prices rose not only year-on-year but also month-on-month: CPI increased by 0.5% after a 0.6% rise in April. Energy was the main source of pressure. The energy index rose 3.9% for the month and 23.5% for the year, while gasoline prices increased by 7% in May alone. Energy accounted for more than 60% of the monthly CPI increase, so the market quickly linked the new inflation jump to higher oil and fuel prices and the effects of the conflict in the Middle East.

Why this matters for BTC

High inflation matters for Bitcoin’s price because of the Fed’s response. If prices rise faster than expected, it becomes harder for the regulator to move toward rate cuts. In that case, money remains expensive, and investors become more cautious toward risk assets, including technology stocks, cryptocurrencies and other instruments that depend more heavily on liquidity.

This was clear in the reaction of traditional markets. After the CPI data was released, the Dow Jones index fell 0.45%, the S&P 500 lost 0.2%, and the Nasdaq declined 0.3%. The drop was moderate because the headline figure matched forecasts, while core inflation, excluding food and energy, rose by only 0.2% for the month.

For BTC, this creates a difficult backdrop. When investors expect a softer Fed policy, demand for Bitcoin is usually supported: there is more liquidity in the market, and appetite for risk is higher. When inflation starts rising again, that scenario becomes weaker.

10x Research’s view of the market

10x Research links Bitcoin’s latest decline to a worsening macroeconomic backdrop. According to its estimates, BTC lost around $21,000 over 30 days, while after the acceleration in inflation, investors began systematically reducing their Bitcoin exposure through ETFs.

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The analysts’ key point is that Bitcoin should not currently be viewed as a classic inflation hedge. In their model, BTC depends more on liquidity conditions: when the market expects softer policy and cheaper money, interest in the asset grows; when expectations shift toward higher rates, demand weakens.

That is why 10x Research sees CPI below 4% as an important signal for Bitcoin. May’s 4.2% reading came in above that threshold, although it matched economists’ forecasts. For BTC, this was not a shock, but it also did not give the market a reason to quickly regain confidence in a recovery.

What will happen to Bitcoin’s price

Bitcoin is currently trading around $63,000 after falling below $61,000. This means the asset has recovered from the initial shock, but it is still not enough to speak of a strong rebound. For the market, the key question is whether BTC can hold near $63,000 and avoid returning to the level where the latest bounce began.

If Bitcoin stays above $63,000, it will have a chance to gradually recover after the reaction to CPI. This scenario would look stronger if investors see that the rise in inflation is mainly linked to energy rather than a broad increase in prices across all categories. In that case, pressure from the Fed may not be as severe as the market fears.

However, the risk of another drop remains. CPI at 4.2% is still too high for the Fed to quickly move toward rate cuts. If investors start moving away from risk assets again, BTC could retest the area below $61,000. Therefore, the near-term outlook for Bitcoin remains cautious: holding $63,000 would support a recovery, while losing this level would increase the risk of another decline.

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